Dutch wholesale gas prices retreated on Tuesday morning as attention turned to Europe’s strong stock levels, after the price gains made on Monday in reaction to an indefinite halt in flows from Russia through the Nord Stream 1 pipeline.

The Dutch front month contract, the European benchmark contract, was down 27.5 euros at 218 euros per megawatt hour (MWh) at 0925 GMT.

The November Dutch contract was down 24 euros at 234 euros/MWh.

“It seems the improvement in fundamentals, as reflected in stock levels, has significantly reduced the risk premium on Russian gas,” said analysts at Engie EnergyScan.

Europe last week met a target early to fill its gas stocks by 80% by November. EU stocks are currently almost 82% full, according to Gas Infrastructure Europe data, with stores in Germany, Europe’s largest consumer of gas, 86% full.

Ratings agency Fitch said the cut in gas flows through Nord Stream 1 came four months earlier than the agency had previously expected but said Europe had prepared for the eventuality.

“The EU plan, supported by increases in alternative gas supplies, particularly record liquefied natural gas (LNG) imports, and the reduced gas use by 15% in 2023 compared with 2021, should help to avoid acute shortages,” Fitch analysts said.

Fitch said, however,there were still many uncertainties surrounding EU winter gas supply and demand, such as the temperature, supplies of LNG and the evolution of the war in Ukraine.

Flows of Russian gas to Europe via Ukraine were stable on Tuesday morning, while eastbound gas flows via the Yamal-Europe pipeline to Poland from Germany continued at low levels.

British gas prices also fell.

The British day-ahead contract was down 21 pence at 232 pence per therm, while the October contract fell by 78 p to 388 p/therm.

In the European carbon market, the benchmark contract was down 2.74 euros at 71.71 euros a tonne.
Source: Reuters